The digital nature of the currency enables the government to follow money trails and prevent counterfeiting, financing of terrorist or criminal activities. Of course it can be also used to suppress financing of anti-government movements.
China’s CBDC might also have an international and geopolitical impact. Digital yuan can attract international users due to its ease of use and no third-party currency requirements. For example, this type of currency which requires only a mobile phone might be attractive to the huge rural population in African countries. M-Pesa, a mobile phone-based money transfer service, is already very popular in Kenya. In other words, there is already a fertile ground for the adoption of digital currency.
The use of digital yuan can spread to other countries which trade actively with China (such as Germany) and this might allow the Chinese government to have some political-financial leverage in those countries through the use of its crypto yuan.
All in all, digital yuan can serve as a tool to spur a country’s economy, to prevent criminal and anti-governmental activities, and be used in geopolitical competition.